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Fiscal federalism and fiscal autonomy: lessons for the UK from other industrialised countries

Darby, J. and Muscatelli, A.V. and Roy, G. (2002) Fiscal federalism and fiscal autonomy: lessons for the UK from other industrialised countries. Scottish Affairs, 41. pp. 26-55. ISSN 0966-0356

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Abstract

The purpose of this article is the following. First, we provide a comparison of the degree of fiscal decentralisation in the UK with that in other countries, and assess the extent to which different areas of public expenditure are assigned to different tiers of government. Second, we assess the degree of fiscal autonomy in the UK compared to that in other OECD countries. We also provide some insights from the theory of fiscal federalism to assess whether the current degree of fiscal autonomy in the UK is optimal, or whether there are useful lessons to be learned from other economies. One key conclusion here is that, although there would seem to be good reasons to increase the degree of fiscal autonomy in the UK, one might want to proceed with caution. We also discuss whether other OECD countries offer useful models in terms of the method of allocation of block grants, the allocation of taxation to other tiers of government, and the way in which are used to achieve the twin objectives of fiscal efficiency and equity. Finally, we consider whether the 'asymmetric nature' of UK devolution, with different national and regional units being assigned different degrees of autonomy, represents a desirable model in the light of experiences elsewhere in Europe. In the next section, we outline the division of spending responsibilities between different tiers of government in the OECD economies. Then we compare the degrees of fiscal autonomy, and assess whether further reform is warranted in the case of the UK. In subsequent sections, we consider how the mixed use of central grants, shared taxation and devolved taxation can impact on the objectives of efficiency and equity; discuss the extent to which different subcentral governments have autonomy on borrowing; and examine how fiscal federalism is evolving in different countries.

Item type: Article
ID code: 6921
Keywords: fiscal policy, economics, federalism, decentralisation, public spending, finance, Economic Theory, Public Finance, Local government Municipal government
Subjects: Social Sciences > Economic Theory
Social Sciences > Public Finance
Political Science > Local government Municipal government
Department: Strathclyde Business School > Economics
Depositing user: Strathprints Administrator
Date Deposited: 25 Sep 2008
Last modified: 15 Apr 2015 10:26
Related URLs:
URI: http://strathprints.strath.ac.uk/id/eprint/6921

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